Home Prices Unexpectedly Fall

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The July S&P/Case-Shiller home price index showed prices fell 0.5% over last month against expectations for no growth.

On a year-over-year basis, home prices rose 6.75%, also less than expected.

Expectations were for prices to be flat month-over-month and rise 7.4% on a year-over-year basis.

Last month, the June report showed home prices unexpectedly fell 0.2% month-over-month, while home prices rose 8.1% year-over-year, a 17-month low.

In a note to clients following the report, Ian Shepherdson at Pantheon Macro said:

"In one line: The downshift looks alarming but it won't last... The trend in the CS home price index has turned around in just a few months; as recently as the first quarter, price gains were averaging 1.0% per month… The deterioration lags the abrupt softening in the median price numbers from the existing home sales report between last summer and the end of the severe winter. But median prices have since rebounded sharply and we expect the CS numbers to follow suit by year-end. The declining proportion of foreclosure sales will boost the price numbers too."

This chart from S&P shows the slowing uptrend in home prices, which has been in place for most of this year.